Sometimes it takes pure anger to motivate a person to make a change.
I’m a numbers gal and I love to play around with numbers, so this week as I was preparing our April budget I decided to calculate how much interest we are paying each month with our debt payments.
I quickly pulled together a spreadsheet:
- Column 1 = name of loan
- Column 2 = total monthly loan payment (columns 3 & 4 should equal #2)
- Column 3 = the amount applied to principal
- Column 4 = the amount paid in interest
- Column 5 = percent of interest paid to total payment (column 4/column 2)
I did this for each loan and totaled the columns. I realized that the total amount of interest we pay each month is 25% of our total debt payments. In other words, 25% of our monthly debt payment goes to the bank instead of reducing our principal.
And what really ticked me off was that total interest number was almost as much as our total home mortgage payment. So every month, we pay as much towards interest as we do towards our mortgage company.
Just more motivation to kick our debt to the curb!
Have you calculated how much you pay in interest every month? Does that number motivate you to attack your debt? Let us know in the comments.